Sunday, September 22, 2013

Bribing us with our own money

Start worrying – estate agents are looking happy

When a fire is raging, it is not always the best idea to throw on more fuel. But the Government’s Help to Buy Scheme is doing exactly that, a policy so weighted towards encouraging sub-prime lending that house builders are selling the packages as state guaranteed discounts. It remains difficult to understand how a supply problem – not enough houses – can be solved by a demand-enducing policy that could result in £130bn of government-guaranteed mortgages. What we do know is that rates of house building are stubbornly unresponsive to house price increases. The argument that higher demand will necessarily lead to higher supply is undermined by the fact that any increase in supply is likely to be insufficient to keep prices under control.

Posted by quiet guy @ 05:27 PM (3838 views)
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8 thoughts on “Bribing us with our own money

  • Thecountofnowhere says:

    more clever reverse psychology propaganda or real concern of the bubble continuing by the home owner daily torygraph?

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  • If you want to increase supply, get rid of stamp duty and only allow help to buy for new build, if you keep it at all. Also, end VAT on home improvements and extensions. New build houses are VAT free, but build an extension to house a baby, and you pay 20% VAT.

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  • Fail, If you want to increase change the planning system.

    Did you see the posts of all the sensible planning applications that had been turned down in just the last few weeks?

    The builders want to build, the buyers want to buy for reasonable price. The ONLY thing standing int he way is the government and the antiquated planning system that is not fit for purpose.

    Successive government in the UK are a total failure, and just pandering to the bankers and NIMBYS. The UK needs a new political party who are there for the working man and not the retired, rentiers and bankers.

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  • “The ONLY thing standing int he way is the government and the antiquated planning system that is not fit for purpose.”

    – depends which purpose someone wants it to fulfil!

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  • This is not just about pumping house prices, the government are trying to stop a deflationary spiral, still. They can’t keep on expanding the money supply themselves they need private punters to do it. Its still a pretty bad plan because its bad for such a large segment of the population.

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  • To my mind, the current boom is down to ppl wanting to beat HTB to the punch. Savvy parents are caving now as they know what will happen come January.

    George Osborne is learning the same lesson the fed just learned for the umpteenth time: the market prices in announcements regarding future changes to government support almost immediately.

    Granted, the positive economic news is part of the picture, but I think prices are rising because there is finally a reasonable expectation prices will rise next year.

    Funny then, that this recent boom has become the main argument against HTB.

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  • Well, whether the planning system is “working” all depends on your point of view…

    1) Bricklayer, architect, plumber = not working
    2) Barratts style land banker = working superbly well
    3) Somebody looking to buy a new house = not working at all
    4) Local NIMBY = working fairly well.

    Of course VAT is the worst tax and SDLT is pretty awful as well, our old chum LVT rides to the rescue and those land bankers will be “encouraged” to actually get building, which is hooray all round for groups 1) and 3) and not so good for groups 2) and 4).

    It’s all a question of whose side you are on.

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  • @mark – Everyone is a vested interest! it’s a game of how many are on each side. Unfortunately being born in the wrong year puts me on the losing side.

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